BitInstant back online following breach, Bitcoin theft

BitInstant, one of the online Bitcoin exchange services, has been down and unaccessible from Thursday evening to Monday due to a “sophisticated attack,” which resulted in a loss of $12,480 in Bitcoins, but luckily no user data compromise.

“We’ve long been targeted by someone using social engineering tactics to attempt to compromise our various accounts at exchanges, with our hosting provider Amazon AWS and even on my personal accounts, mostly without success,” explained one of the BitInstant team. “At no time have we ever had a single system or account compromised through technical means, or indeed at all before yesterday.”

But the weak link proved to be Site5, the site’s domain registrar, as the attackers managed to convince Site5 staff with clever social engineering that they were talking to the aforementioned representative, and to add a new email address to the site’s account and to make it the primary login.

Once booted out of the account, the attackers managed to gain access again and redirect DNS by pointing the nameservers to hetzner.de in Germany, then redirect traffic to a hosting provider in Ukraine.

This allowed them to lock out BitInstant co-founders, to hijack their emails and reset the login for the VirWox exchange, enabling them to steal the aforementioned amount of money.

“No other exchanges were affected due to either Multi Factor Authentication, OTP, Yubikey’s and auto lockdowns,” the BitInstant team claims, and the stolen internal company emails are useless to the hackers because PGP encryption of emails in internally mandated.

“None of your personal or transactional information has been leaked. We keep all that data offline to protect everyones privacy,” they reassured users, adding that the attackers managed to only steal that small sum due to major choke points and redundancies in their system.

The team suspects the attackers to be of Russian origin, even though they were sneaky enough to cover their tracks. They also said that they will be moving to a more secure registrar as soon as possible.